Your Credit Scores Should Be Free. And Now They Are.

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Pulling credit

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Federal consumer protection and national security laws require that dealers verify the identity of buyers, according to Bradley Miller, associate director of legal and regulatory affairs for the National Automobile Dealers Association (NADA). The Patriot Act has requirements meant to counteract terrorists who might use car buying to launder money. Other federal regulations, known as Red Flag Rules require dealerships to protect against identity theft. Pulling a credit report is a quick way to verify that the person presenting himself as a buyer isn't actually trying to steal someone else's identity.

In a legal sense, a dealer only needs a "permissible purpose" to access a person's credit, Miller says, and there are a number of such instances. Usually, it occurs when a consumer wants to take advantage of low-interest financing via the dealership. But it would also be permissible, for example, for a dealer to ask for a credit report before accepting a personal check from a customer. It may be the dealership's only hedge against taking a bad check when sales take place on evenings or weekends. That's when banks are closed, and it's difficult to verify that the funds are available.

Having said that, the dealership is required to have your permission before accessing your credit and doing so for verification of identity can be avoided and other means provided. They have no legal right to pull your credit against your wishes.

Your Credit Scores Should Be Free. And Now They Are.

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